By Peculiar Okoye
Introduction.
Arbitration is a dispute resolution method, outside the regular court system, where parties agree to submit their disagreement to an independent third party, an arbitrator appointed by the arbitration panel, whose decision is usually binding. Arbitration is the settlement of disputes between parties who agree not to go before the court but accept as final the decision of dispute resolvers of whom they choose, a place they choose and laws they must have agreed upon in advance and rules which there are not much formalities, proof, procedure required by the court provided under section 1 of the Arbitration and Mediation Act 2023. Everything that concern arbitration is governed by the Arbitration and Mediation Act 2023. This is a private, binding and often quicker alternative to litigation for resolving disputes in Nigeria especially in commercial matters.
Maritime Arbitration is a private, expert-driven method for resolving shipping disputes efficiently and fairly, often involving international parties. It typically covers disputes relating to charter parties, bills of lading, cargo claims, shipbuilding and repair contracts, ship sale and purchase agreements, marine insurance claims, collisions and salvage, as well as freight and demurrage claims. The reluctance of parties in international contracts to submit to foreign national courts underscores the importance of arbitration in the maritime sector. Arbitration allows parties from different countries to resolve disputes in a neutral forum, with expert arbitrators, agreed rules, and procedures, avoiding the uncertainties, delays, and potential biases that may arise in foreign courts. This makes maritime arbitration a preferred mechanism for resolving complex shipping and commercial disputes efficiently and fairly.
Maritime international arbitration provides parties with the option of resolving disputes privately, outside the national court system, which is particularly important in international shipping where parties often come from different jurisdictions. Hosting arbitration activities within a state’s borders offers multiple advantages, including attracting foreign direct investment and promoting strong local private sector participation. Moreover, arbitration generates “invisible earnings,” such as fees, professional services, and associated economic activity, which can be substantial and contribute meaningfully to a state’s developmental plans. By providing a neutral, efficient, and expert-driven forum, maritime arbitration enhances investor confidence, encourages cross-border commercial activity, and strengthens the overall business environment within the host state.
The Supreme Court held in the case of Attorney General of Rivers State v. Attorney General of Akwa Ibom State & Attorney General of the Federation (2011) 8 NWLR (pt. 1248) 31 on the principle governing settlement of maritime boundary dispute when it held that “the broad general principle of settlement of maritime boundary solution consistent with domestic laws and practices. The paramount thing when dealing with maritime boundary disputes between states is to offer equitable solution.
Legal Framework/Practice For Maritime Arbitartion In Nigeria
- Arbitration And Mediation Act, 2023.
Section 1(1) of the Act, 2023which provides that it applies to international commercial arbitration, subject to any agreement in force between Federal republic of Nigeria and any other country or countries; inter-state commercial arbitration within the Federal Republic of Nigeria; and commercial arbitration within the Federal Republic of Nigeria. section 2 of the Act, provides that arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate complete agreement, which shall be in writing. Section 3 provides that unless the parties agree, arbitration agreement is irrevocable.
This Act is drafted broadly to cover “commercial arbitration”, there is no legal bar against applying it to disputes arising from maritime contract, provided the agreement submits the dispute to arbitration. The 2023 Act should be the statutory regime under which maritime arbitration in Nigeria may be conducted.
There is no separate maritime arbitration statute rather maritime disputes when related may be arbitrated under the general framework of Arbitration and Mediation Act, 2023.
- Admiralty Jurisdcition Act 1991
Section 1 vests exclusive jurisdiction in the Federal High Court over admiralty matters, just like section 251(1)(g) provides that the Federal High Court shall have and exercise jurisdiction to the exclusion of any other court in any admiralty jurisdiction, including shipping and navigation on the River Niger or River Benue and their affluents and on such other inland waterway, all Federal ports, and carriage by sea.
- Uncitral Model Law On International Commercial Arbitration.
This was adopted by the United Nations Commission on International Trade law on 21 June 1985. Subsequently, amended in 2006 is an internationally recognized legal framework designed to guide countries in creating modern and efficient arbitration laws. It provides a harmonized set of rules for conducting international commercial arbitration, ensuring consistency and predictability across jurisdictions. The parties are free to choose the arbitrators under Article 10, procedure under Article 13, place of arbitration under Article 20 and rules of procedure to be followed by the arbitral tribunal in conducting the proceedings under Article 19.
There is autonomy in arbitration which protects the independence of arbitration where courts can only intervene in specific situation like the court assisting the arbitral tribunal in taking evidence on request by a party; and the court may execute this request within its competence and according to its rules on taking evidence under Article 27. Article 5 provides that no court shall intervene except where so provided in this Law.
The parties shall be treated equally and they shall be given the full opportunity in presenting their case under Article 18.
Challenges In Maritime Arbitration
There is an undeniable tension between the Arbitration and Mediation Act 2023 (AMA) and the Admiralty Jurisdiction Act (AJA). While the AMA establishes a modern, arbitration-friendly framework that empowers parties to resolve disputes privately and efficiently, Section 20 of the AJA appears to pull in the opposite direction. It provides that any agreement which seeks to “oust the jurisdiction” of the court in certain admiralty matters is null and void. These matters include core maritime subjects such as maritime liens, ship arrests, salvage claims, and collision disputes, among others.
The practical implication is significant: where a dispute falls squarely within the statutory scope of the AJA, parties may be compelled to pursue their claims before the Federal High Court rather than through arbitration. This directly limits the enforceability of arbitration agreements in many maritime contexts, even where parties have freely and expressly chosen arbitration as their preferred mechanism. In effect, Section 20 strikes at the foundation of party autonomy in maritime arbitration. It raises a critical question: can parties meaningfully choose arbitration over litigation when the AJA has already reserved jurisdiction for the courts? Even where commercial actors expressly agree to resolve maritime disputes through arbitration; perhaps due to its speed, expertise, confidentiality, or international enforceability, Section 20 appears to restrict that freedom whenever the dispute involves maritime liens, arrests, salvage operations, or collisions.
This statutory conflict creates uncertainty for maritime operators, investors, and shipowners who rely on predictable dispute-resolution mechanisms. It also places Nigerian maritime arbitration at a disadvantage compared to jurisdictions where admiralty matters and arbitration are allowed to coexist without legislative conflict. The Court of Appeal in M.V Panormos Bay v Olam (Nig.) Plc (2004) 5 NWLR (pt. 865) 1 held on the Effect of the Admiralty jurisdiction Act on arbitration clause in bill of lading (being a maritime claim or dispute); “prior to the coming into force of the AJA, sections 2 and 4 of the Arbitration and Conciliation Act applied in all contracts having arbitration clause without any limitation whatsoever. However, section 20 of the AJA has altered the existing position in admiralty matters thereby modifying section 2 and 4 of the Arbitration and Conciliation Act and limiting enforceable arbitration agreements to those having Nigeria as their forum. Indeed, the intention of the lawmakers as regards section 20 of the AJA is to derogate from the ACA now the AMA. The Court of Appeal noted in this case, that since the object of the arbitration clause in the bill of lading is to oust the jurisdiction of the court to exercise its admiralty jurisdiction over the case, the said clause is null and void.
In applying the principle of Pacta Sunt Servanda, it is generally the duty of the court to give effect to the intentions of the parties. However, this duty can only be fulfilled where there is no statutory limitation. Section 20 of the Admiralty Jurisdiction Act (AJA) represents such a statutory limitation, restricting the enforcement of arbitration agreements in contracts that fall within admiralty matters.
This tension highlights a key principle in Nigerian maritime law: while arbitration is broadly encouraged under the Arbitration and Mediation Act (AMA), its application in maritime disputes is not absolute. Parties may enjoy autonomy in choosing arbitration for most commercial disputes, but when statutory admiralty rights are implicated, the courts may intervene, limiting the effectiveness of arbitration agreements. Consequently, anyone drafting or entering into a maritime contract in Nigeria must carefully consider both the AMA and the AJA, ensuring that arbitration clauses are framed in a manner compatible with statutory requirements.
Another challenge in this form of Arbitration is the fact that the courts have not spoken with one voice. Courts have been inconsistent in their approach to arbitration clauses. The Supreme Court in the case of Mekwunye v Imoukhuede (2019) 13 NWLR (pt. 1690) 439 upheld an arbitration clause even when it was a defective arbitration clause on the basis of giving effect to the intention of the parties, notwithstanding the fact that it was a defective arbitration clause. However, in Frontier Oil Ltd v Mai Epo Manu Oil Nig. Ltd(2020) LPELR-49546 (CA) where the Court of Appeal declined to give effect to an arbitral clause in an agreement, thereby sending the parties to litigation. These decisions illustrate the practical uncertainty that parties face when choosing arbitration in any contract in Nigeria.
Another challenge in which we face is the enforcement of arbitral award, this subject has always remained an issue. An arbitral award is final and binding. Parties have chosen their own judges which they trust to judge fairly and justly. The Court of Appeal held in the case of R.M.A.F.C. v. U.E.S. Ltd. (2011) 9 NWLR (Pt. 1252) 379 that in considering enforcing an arbitral award, once there is misconduct within the law or error on the face of an arbitral award, the court will not grant an application to enforce an arbitral award. In another case of Sundersons Ltd. v. C.S. PTE Ltd. (2015) 17 NWLR (Pt. 1488) 357, The Court of Appeal held that any of the parties to an arbitration may request the court to refuse the enforcement of an award if the party against whom it is invoked furnishes the court proof that arbitration is not valid under the law which the parties have indicated should be applied. These cases illustrate that while arbitration offers flexibility and party autonomy, judicial intervention both in enforcing arbitration clauses and arbitral awards, it can introduce uncertainty and limit predictability in Nigerian arbitration practice.
Conclusion
Maritime arbitration in Nigeria stands at a critical crossroads. The Arbitration and Mediation Act 2023 provide a modern, internationally aligned framework grounded in UNCITRAL principles. It reinforces party autonomy, minimizes court interference, and promotes efficient recognition and enforcement of arbitral awards. Through these features, arbitration emerges as a natural and effective mechanism for resolving maritime disputes.
Yet challenges remain. Section 20 of the Admiralty Jurisdiction Act continues to generate uncertainty, especially when interpreted as restricting arbitration of maritime claims. The legal position is far from settled, as Nigerian courts are still negotiating the delicate balance between protecting admiralty jurisdiction and upholding commercial arbitration agreements freely entered by maritime parties.
Despite these difficulties, maritime arbitration in Nigeria is undeniably growing in relevance, acceptance, and sophistication. The AMA 2023 offers a genuine opportunity to build a credible, modern, and commercially responsive system of maritime dispute resolution. For this potential to be fully realized, the courts must adopt a consistent pro-arbitration stance, capacity must be strengthened across the justice sector, and policymakers must give deliberate and sustained support to arbitration as a national strategy.
If these steps are taken, Nigeria will be better positioned to resolve its domestic maritime disputes efficiently, reduce reliance on foreign arbitral centers, enhance investor confidence, and reinforce its status as a leading maritime nation.
Recommendation
Going forward, there must be coherence between the Arbitration and Mediation Act 2023 and the Admiralty Jurisdiction Act, both in judicial interpretation and in the drafting of maritime contracts. The task ahead is to refine the system, embrace international best practices, and deepen the culture of arbitration so that Nigeria can fully realize the benefits of this vital dispute resolution framework.
Arbitration is often promoted as faster and cheaper than litigation. However, in Nigeria it has not always lived up to this promise. Court intervention, particularly during the enforcement of arbitral awards, can introduce additional layers of delay. Institutional and professional capacity also remains inadequate. Although Nigeria hosts institutions such as the Lagos Court of Arbitration and the Maritime Arbitrators Association of Nigeria, their visibility, activity level, and global competitiveness remain limited compared to established arbitral centers worldwide. Nevertheless, the future of maritime arbitration in Nigeria is promising. With the right infrastructural, institutional, and legal support, Nigeria can position itself as a leading venue for the settlement of shipping and offshore disputes. The prospects of maritime arbitration depend not only on the law itself but also on the willingness of institutions, courts, and policymakers to implement reforms and respond proactively to commercial realities.
Judicial support will be essential. Arbitration can thrive only where courts respect party autonomy by enforcing arbitration agreements and supporting the arbitral process. The judiciary must adopt a clear, consistent interpretative stance that aligns with modern arbitration law and commercial practice. Arbitration agreements should be upheld, and arbitral awards should be enforced unless one of the limited grounds for refusal or setting aside expressly provided under section 55(3) of the Arbitration and Mediation Act 2023 is established. With principled judicial support, effective institutions, and coherent legislation, maritime arbitration in Nigeria can mature into a reliable, efficient, and internationally respected mechanism for resolving maritime disputes.
Peculiar Okoye, is an associate at Chinedu G. Udora & Co.